Michigan behind the times

Most of the reports we get about Michiganís economy suggest improvement, but a new study by Business Leaders of Michigan shows just how far behind we were and, in many cases, still are.

The study deals with all categories of activity while the periodic reports we typically get focus on just one statistic, like employment or tax climate.

Frankly, the BLM report paints a picture of a state that is behind the times and may never catch up.

Michiganís performance was compared to 12 peer states representing new economy and traditional benchmarks. It was also judged next to another group identified as the top 10 states, which were selected based on average ranking on key job, economic, personal income and population indicators from 2002-12.

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New economy states included in the study were California, North Carolina, Colorado, Texas, Massachusetts and Virginia. Traditional states were Alabama, Georgia, Illinois, Indiana, Ohio and Tennessee. The top 10 were North and South Dakota, Texas, Washington, Wyoming, Alaska, Iowa, Massachusetts, Nebraska and New York.

The highlights speak for themselves.

Michiganís private sector employment grew at the sixth fastest rate in the country between 2011 and 2012, and its unemployment rate dropped from 10.3 percent to 9.1 percent. However, Michiganís 2012 unemployment rate was more than 3 percentage points above the top 10 average.

From 2009 to 2012, Michiganís annual unemployment rate fell four times faster than the U.S. average but is still 1 percentage point higher.

While Michiganís per capita (per person) Gross Domestic Product has declined since 2002, growth in the past year has been better than most of its peers. Still, Michiganís per capita GDP is below all peers except Alabama. Michigan per capita GDP is recovering at twice the rate of the U.S. average, but is still a shocking $10,000 lower.

Michiganís population increased slightly between 2011 and 2012, and the state has a population of 3 million more than the top 10 average. Michiganís population has been declining over the past decade while Michiganís peers have been growing, particularly those in the South and West.

Looking at employment, GDP and income, Michigan has been growing at a competitive rate since 2009 but from a low base.

With the tax changes that went into effect on Jan. 1, 2012, Michiganís corporate tax environment is now ranked among the best. Only Virginia among the peer states has a better corporate tax climate than Michigan.

Michiganís overall business tax climate improved to 12th best nationally while the top 10 state average rank is 23. While the changes made Michigan more competitive than peers in terms of overall business tax climate, unemployment and property tax climates remain uncompetitive.

On average, businesses pay more to operate in Michigan than in the top 10 states. Nationally, Michigan ranks in the bottom 10 states in which to do business. Michigan has a higher cost of doing business than every peer state except for California and Massachusetts.

Michiganís unit labor cost remained constant from 2010 to 2011 but is 15 percent higher than the top 10 average.

Michiganís worker productivity growth was lower than the top 10 average over the past decade and has a current level of GDP per worker that is lower than the average for the top 10 states.

The stateís share of workers that are represented by a union has declined slightly from 18 percent to 17, ranking Michigan sixth highest in the nation in that category.

Michigan is one of only four states in the nation without any job, investment, or research and development tax incentives. The other three states without any such incentives also have no corporate income tax.

Michiganís electricity costs for business are significantly lower than those in peer states California and Massachusetts.

The state has lower per capita state and local government spending than the top 10 average.

Michiganís unfunded health care liabilities greatly exceed its peers. While actions taken by the governor and legislature will help reduce Michiganís total unfunded liability, it remains one of the highest in the nation.

Michiganís 4th graders are performing below the top 10 average, but are less than 1 percentage point behind. A score of 47.6 is considered proficient; Michiganís 4th grade average score is 43.8 percent. Michiganís 4th grade reading scores increased slightly over the past decade, but are still in the bottom half of the nation.

Michiganís 8th grade math scores have been slowly rising since 2000 but rank in the bottom half of the country.

Michiganís share of career- and college- ready high school graduates has declined 4 percent since 2005. Among peers, only Alabamaís and Tennesseeís high school graduates are less prepared for careers and college than Michiganís.

Michigan is in the middle of its peers for number of degrees per 10,000 of population.

Educational attainment in Michigan is in the bottom half of states, in part because Michigan does not attract as many highly educated individuals as other states. In 2011, Michigan was last among all states in the share of population with an associateís degree or higher migrating from other states.

On a brighter note, Michigan universitiesí research and development expenditures are greater than all of its peers except Massachusetts and North Carolina.

In the past year, Michigan has grown its export value per $100,000 GDP while the value for many peer states has gone down.

Michigan produces more patents per capita than all peer states except California, Massachusetts, and Colorado.

The availability of venture capital in Michigan has grown more than in peer states in the past year and is about in the middle of peers in terms of overall level. However, entrepreneurial activity is lower in Michigan than in all peer states.

The percentage of urban roads in poor condition in Michigan is the 45th worst in the nation. While conditions have improved since 2001, they have worsened again since 2009.

Clearly the figures show Michigan started from a ďvery deep holeĒ in the period studied, said Doug Rothwell, chief executive officer of BLM.

ďThis the best weíve been in the last decade,Ē Rothwell said. Clearly the state needs to invest more in its talent, not in terms of dollars spent on education, but ďwe need to get more for what we are spending,Ē he said.

Improving roads is another easy-to-identify target in which to improve.

We know our brightest and best young people are leaving the state. We just have to decide whether we want to do anything to reverse that trend, continue as we are or just become a haven for retirees.

Glenn Gilbert is group editor of Digital First Media newspapers in Michigan. Contact him at glenn.gilbert@ oakpress.com or 248-745-4587. Follow him on Twitter @glenngilbert2. Read his blog at glenngilbert2.blogspot.com.